Member Info for Soundingoff

I think it was the Bristol event where JP first said that one successful drill may be enough. He advised they had a decision tree for all possible outcomes. The value of TE5 and TE10 (hopefully) will be known. The big question for me is how much does TE9 affect the value of the basin model.

Indeed Sunday. I have to say, I was almost in a state of hibernation, waiting on TE10 and the future. I was still confident of a good outcome in the end, but unsure of our path and timescale.

Unfortunately for those that couldn't attend, it's not easy to get a feeling for the event, but there was something different about it. In the past, you could feel some sort of disconnect. JP would tell us what we were trying to target, all very achievable but it needed more planning and work. 'Stay with us'...

This time there was 100% focus. After detailed questioning by myself and others I trust, the same messages flowed through, something that hasn't always been the case. It appears all the time spent planning and executing is hopefully coming to fruition. This time there was willingness to talk beyond successful drilling and allow us to see the complete road map, requirements of a buyer etc.

Whether TE10 flows commercially or not (and from all information I have read and listened to, I'm very hopeful), I believe we are at a fork in the road for Sound and we will probably have some decisions to make, as a company and ultimately as investors.

I may be cynical Tableleg, but Fellrunner posting again so close to a potential purchase and sale by JP's plan is, to be honest a little unsurprising. There's quite a correlation with her posts and SP weakness. Looking for a trade or even an investment if I had to guess.

We all know your recent posting Fellrunner, and quite frankly it has been unacceptable at times. It appears it is you that risked too much and that is your problem.

I went to that 'Mayfair Liquid Event' and took in as much as I could- information, not red wine. If I'm brutally honest, maybe too many cod bites.

Anyway, the discussions were nothing like the deep dive, far from it. I went there expecting to be told (or warned) that flow rates could be very low. That simply was not the case, and I spoke (and heard) it from 4 technical staff. Not JP. I didn't speak to him on the day.

I'll give you your comment on the metric. I had missed the subtle explanation, so well done you. Pat on the back.

You comment on cash is simply wrong. We can drill TE11 and have 1 year of opex in reserve.

I spoke to a few who took the time to attend even though they were quite negative/critical on their current investment in Sound. They did not have that opinion and found the event very useful.

Either way, we will have the flow rates in a few weeks, so you'll either look like a fool (and probably won't return), or you can come back and gloat.

It's a shame to see this change in you as an investor and a poster (trader?), but good luck to you.

Trellis- Thanks for the extra detail. I think others have since commented on quite a few of your points but all I can say is sometimes I feel you have to look at the big picture rather than focusing on the details. I feel that time is now.

The results from TE10 are only a few weeks away and hopefully, with success we will have a much clearer understanding of some of your questions.

Trellis- to answer some of your questions:

1.I believe the license situation was planned. Very much part of sale planning, setting up stages to provide opportunity.

2. You may have missed the important point I made about the concession swapping to TE10. Morocco appear to want more certainty. It could well be completely out of our hands. They said Morocco have stepped up their communication significantly (in all areas) since TE10 looked promising.

3. There is nothing to say on the trading plan. If you understand it you will know that. It is set in stone and out of JP's control. If it does transact in a week or so and the SP drops, I will be buying.

4. Of course Sidi can be irrelevant. It was purchased as part of a plan. If TE10 is successful it is no longer required. If it isn't, it may be. It's simple business planning.

5. Quite a few of the staff mentioned that any deal is for us to decide as the owners. But again, I don't bother asking questions that cannot be answered.

6.Unfortunately you're completely missing the point. Maybe I didn't explain well enough. SBK is important because we can use it as a marker against seismic in the area. It adds value, nothing more.

8. You can always email JJ. I didn't get a chance to ask him as I'm more concerned about TE10 and the seismic right now. Based on the last presentation and opex/capex expectations, I believe we have plenty of cash.

So in summary I suggest you fire up your computer and send some emails off to our communicative staff rather than moaning on here.

I hope your recovery continues to progress.

Mike- JP stated Sidi was irrelevant if TE10 flows commercially.

Pretty much everything appeared irrelevant other than the results from TE10.

Yes whosthedaddy, but it's more the relevance to our model. We didn't have time to dig any deeper.

Yes bhama, I wasn't as direct as that in my posting regarding the drilling, but I agree. It's looking like discussions have been ongoing for some time.

DM- That's the point, you have to assess a deal on its merits. We can only wait and see what materialises. If TE11 was another duster, we'd probably be back where we started (SP wise) which many couldn't take. Plus what effect does that have on the value in our model (which clearly does have value, the question is how much).

Another point to add to my summary, was that John explained that SBK is significant in our model and that there are now 3 discoveries in it, SBK, TE5 and TE10.

Pontcanna- There are the initial rates and the full test, which will take longer.

I had no expectation for the event other than it would be an opportunity to gauge the general mood and get a little clarity on a few items.

My general feeling on Sound before this event was optimism for TE10, but in all honesty I’d almost sidelined it and accepted what will be will be. I had also changed my view a while back, thinking that we would be drilling 11 whatever the outcome of 10.

I have to say I was somewhat surprised by the event. Items of note:

During the planned question part, Brian advised that if the economics presented themselves (flow etc). TE10 could take over from TE5 as the basis for the concession. The delaying of the GSA makes sense...

Schlumberger believe TE10 will flow commercially and so do the team. ‘But we’ll just have to wait and see’.

Myself and a few others took up far too much of John Argent’s time (again). A huge amount of detail on the seismic so far and their views on what has changed. The amount of work we are doing for our buyer is significant. We really are trying to make this plug and play. Also a very in depth explanation of why TE10 is taking so long.

John would not be drawn on the Palaeozoic and the focus really is TE10. That model is not changing and neither are the TCFs. John has even gone back over old data to provide third party validation of our model. Something he did when he was the one looking to purchase Ophir.

Finally the most significant point for me. During the questions JP would not be drawn on drilling TE11. Three other employees have convinced me (not from what they said, but what they didn’t say) that TE10 with commercial flow rates will be it. Full stop, job done. Or maybe not quite.

We have all read people’s views on the Sound journey, many simply want it done. With the Newco setup and the lack of info on the Palaeozoic, I’m seriously considering we may end up with a contingent sale. Those that want to leave can, others stay on.

‘The next 4-6 weeks are the most important in Sound’s history’ said by not one but two team members.

Whatever you choose or want to believe, It’s all about the flow rates (or not).

Spot on PNE.

I'm sure there'll be plenty of feedback, myself included.

I can't remember how long the legals took to complete Crude, but the deal was agreed in around 4 months.Obviously we don't know when the real discussions started, and it could have been a lot earlier than the official sale process. Cove had a fraction of the exploration potential that we have, but the question is what value can be ascribed to that.

Indeed seaton. It's all too easy to make assumptions and also apply our own views on risk and reward onto someone else. A very large leap has been made there about JP's motivations. As someone dealing with these individuals on a daily basis, that is simply not possible. Everyone has different motivations.

The company remuneration/option documents are guideline and standard practice. But at the end of the day they are just that, guidelines, not targets or set in stone.

Much of Norway's income comes from O&G though, so putting those returns back into O&G investments leaves them open to significant diversification risk. I think this change has been expected for a while.

Either way, there are lots of opinions out there about where prices are going to go. Luckily for us, gas is in demand.

Yoghurt- Whilst discussing the three well program at the DD with John Argent, he said that we should never rule out TE2...

Some interesting posting this afternoon. Thanks for the thoughts.

I'm not sure I would make the link between JP's director buying at 74p and the trading plan though. 27K of shares were purchased, which at the time only equated to a couple of weeks pay. This was also just prior to Badile and it's fairly obvious they had very high hopes for it.

medi- You're missing out the capital cost of LPG conversion- $5 billion at last count. For a bridge fuel, LPG would be a very expensive route if Morocco prove to have gas independence.

Jag- I've done the figures before, but unfortunately I can't find them. I have to say this is just what popped into my head, but when adjusting for their small share, gas pricing, offshore costs, taxation etc, I had around 0.5 TCF discovered in my head based on the 22TCF of discoveries at the time. The HUGE difference was the level of potential vs Sound. They had only 2 TCF of exploration equivalent and that's before adjusting for gas pricing, offshore costs, taxation etc. There is no comparison to Sound on that front.

In reality this deal was very good for Cove. From memory, the owners of the field have only just secured their GSA and it has taken a huge amount of time to get this field into development, devaluing the original purchase of Cove somewhat.

I'd hold off on what we could be worth just yet. We have a drill target already planned, but we know nothing about it whatsoever or indeed the basin model (Palaeozoic) supporting it. A fascinating (and frustrating) situation to be in, where this additional potential value could be worth a small portion of the TAGI or fingers crossed, multiples.

I'd like to see some clarity on the drill/model before the event next week. If not, a good reason as to why 4 months on, it isn't publicly available. Interesting times.